Shops push affinity, referrals over sales

The current economic doldrums and a media landscape teeming with new options for where to spend marketing dollars only exacerbate the need for an agency to be able to prove its worth. But as marketing plans become more complicated, agencies are learning to be more flexible in terms of the metrics they employ and the objectives they set to ascertain return on investment.

"It used to be there was a limited number of elements in a campaign, and something would happen in the market, you'd know the cause and effect," says John Colasanti, president of Interpublic Group of Cos.' Carmichael Lynch, Minneapolis. "Now you've got at least five or six campaign elements working together, and it's hard to know exactly what's coming from what channel."

As a result, Mr. Colasanti says, sales aren't the only metric that holds water. "Agencies are getting more adept at pointing out different indicators," he says. "It's not just bottom-line sales. There's awareness, brand affinity, loyalty, referrals."

"Clients have been great about asking for balanced scorecards, upon which we can weigh the effectiveness of the overall marketing plan," says John Osborn, president-CEO of the New York office of Omnicom Group's BBDO Worldwide. "That doesn't suggest we don't look at the effect of individual marketing levers, but we're working more than ever to get that 20,000-foot view."

SKEPTICS ABOUND

Adding urgency is the fact that the 30-second TV spot is the subject of deep skepticism from marketers.

One sign of this is the increasing popularity in the U.S. of media audits, conducted by companies that keep an eye on media agencies and the prices they're getting for marketers. Though it's just 19 months old, Media Performance Monitor America, the U.S. branch of U.K. media consultancy Billetts, boasts 13 clients that collectively spend just under $3 billion each year in broadcast. MPMA assesses its clients' media buys by benchmarking against a list of competitors. The audits are intended to help marketers that commission them gain an upper hand in negotiations.

"Understanding your overall value-for-money is the first step in measuring future returns," says MPMA Chief Operating Officer P.J. Leary. "What are you getting for your investment, and are your prices paid commensurate with the value delivered? The smart advertisers are working hard to get at those answers and, increasingly, they are looking to an objective source with access to robust databases to help them."

The key in divining ROI both on an aggregate basis and for individual pieces of vast and complex marketing programs is "attribution, attribution, attribution," says Ira Helf, executive director-marketing analytics at WPP Group's Ogilvy & Mather.

"If you think about ROI, the calculation itself is pretty simple," Mr. Helf says. "It's a matter of getting the inputs right. We spend a lot of time thinking about how we can gather [information] more accurately or better model the pieces we can't observe."

Part of this involves looking to non-financial metrics where financial ones aren't available. "As long as you cascade it all the way down, and can add it all up and get to a financial metric at some point," he says, "that's OK because you're taking each level of the customer journey and setting a key metric against them."

Every portion of the ad process- from the creative brief to the execution to the media buy-is under close scrutiny. And the result can be more potent advertising. BBDO just took home a Gold Effie, an award based on marketing effectiveness, for its work on Campbell's Soup at Hand. To get consumers to try the portable soup-a food not thought of as particularly mobile-the agency developed a print, TV and out-of-home campaign depicting real-life scenarios. The campaign exceeded its objectives, nearly doubling both the trial rate and repeat use rate after the first year, according to ACNielsen data.

OPTIMIZING RESULTS

Other marketing disciplines that command much smaller proportions of marketers' budgets stand to gain from the ad industry's struggles, but these alternatives aren't avoiding ROI scrutiny either. Even direct marketing, regarded as relatively easy to measure, is working to optimize how it demonstrates results to marketers.

One of direct marketing's big challenges is improving how marketers that use direct tactics-mail, e-mail and so forth-inspire not a direct response but, say, a trip to the store. David Scholes, president-CEO of Omnicom's Targetbase, Dallas, says these efforts aren't as easily measured as those involving basic mail-order.

But, he says, the big hurdle to increasing accountability, even in a highly accountable field like direct marketing, is "the will."

"Are they really willing to listen to the consumer, respond back to the consumer and then listen again?" Mr. Scholes asks. "Measurement is sequential learning. The knack is being able to learn and change what you've done so you improve."